Oil and Gas Value Hits New High

LAWRENCE--The value of oil and natural gas produced in Kansas hit an all-time high in 2004, according to data compiled by the Kansas Geological Survey, based at the University of Kansas.

Wells in the state produced $3.5 billion worth of oil and natural gas last year, said Tim Carr, head of the Survey's energy research section. That was a jump of about $500 million from 2003, and an increase of more than $2 billion since 1998.

"The increase in the value of oil and gas was the result of higher energy prices last year, and not the result of any increase in production," said Carr. "Oil production held about steady and natural gas production declined slightly."

Kansas produced about 33.9 million barrels of oil last year, about the same as 2003. Last year's oil production was worth about $1.3 billion, compared to about $900 million the previous year.

Natural gas production was 405 billion cubic feet last year, down about four percent, or 18 billion cubic feet, from 2003 levels. Because of higher prices, however, the value of that production increased from $2.1 billion to $2.2 billion.

"The drop in natural gas production was actually the smallest decline that we've seen in many years," said Carr. "That's partly because production declines in the Hugoton natural gas area of southwestern Kansas have slowed in the past year, and partly because natural gas from coal beds in eastern Kansas is starting to come on-line in a big way."

Wellhead prices for oil in Kansas ranged from a low of about $25 per barrel at the beginning of 2004, to a high of nearly $50 late in the year. Prices have currently backed off to just under $40 per barrel.

"Kansas is a mature oil producing state," said Carr, "and these higher prices led to additional exploration and drilling that kept production about steady, instead of dropping."

Wellhead prices for natural gas were up also, ending the year at about $6.00 per thousand cubic feet.

"If coalbed methane production continues to increase, we might see a zero decline in natural gas production in the state next year," said Carr.

Kansas currently ranks eighth among the nation's states in the production of both oil and natural gas.

Story by Rex Buchanan, (785) 864-2106. For more information,contact Tim Carr (785-864-2135).